Kentucky League of Cities, association of counties describe reforms

Officials at the Kentucky League of Cities and the Kentucky Association of Counties say they're remaking their groups to both meet legislative mandates and erase the shadows of recent scandals.

"A cultural change has occurred," Paducah Mayor Bill Paxton, the League's vice president, told the state legislature's Interim Joint Committee on Local Government on Wednesday. "We know the Kentucky League of Cities will be measured not by what we say, but by what we do."

Representatives of both groups' executive boards appeared before the committee to explain how they were fulfilling the requirements of Senate Bill 88, which was passed in the 2010 General Assembly session in the wake of spending and conflict-of-interest problems that jettisoned the executive directors of both KLC and KACo.

The law aimed to make both the League and KACo more transparent and accountable, as both groups are funded through taxpayer dollars. The groups provide lobbying, legal services and insurance services to cities and counties.

Among the changes:

■ Both groups have created new open records and open meetings policies that are advertised on their Web sites. Starting Jan. 1, both groups will have listings of all major expenditures.

■ Both groups have created conflict-of-interest and financial-disclosure policies that bind employees and board members.

■ All expenses at both organizations are reviewed monthly by executive board committees.

■ All contracts above a certain amount must be competitively bid (above $5,000 for the League, above $20,000 for KACo). At KLC, the executive board must approve any purchases above $50,000.

■ Credit card use has been strictly limited.

In addition, both groups have made other changes to comply with suggestions made by state Auditor Crit Luallen, who audited both groups after the Herald-Leader published a series of articles about the problems.

For example, the League has eliminated all spousal travel and the purchase of any tickets to sporting events, which had been done frequently. The League will no longer allow loans as retention bonuses, and all surplus property put up for sale has to be assessed at fair market value. The executive board is still evaluating its financial support of the New Cities Institute, a non-profit set up by former executive director Sylvia Lovely to help civic engagement.

KACo has developed a three-year strategic plan and hired former legislator and judge-executive Carolyn Belcher as CFO to keep a sharper eye on finances.

Sen. Damon Thayer, R-Georgetown, one of the authors of SB 88, asked specifically about "golden parachutes" both of the groups' former leaders received.

KACo Executive Director Bob Arnold was forced to resign in September 2009 but received his $178,000 annual salary plus benefits through June 2010 because of the way his contract was written.

Lovely, who apparently had no contract, stepped down in August 2009 and received her salary of $331,000 through Dec. 31 of that year.

The groups' new directors — Jon Steiner, who starts at the League on Monday, and KACo's Denny Nunnelly — are subject to much stricter contracts, board members said.

"Going forward, I hope you remember you are an organization funded with taxpayer dollars," Thayer said. "You've got a ways to go to repair the damage. There are people who are still angry and upset about what happened."

Pike County Magistrate Chris Harris, KACo's board president, said board members understand they weren't paying close enough attention to spending and other problems in the past.

"We've tried to change the culture at KACo to make sure the board is more involved on a daily basis," he said.